LlamaRisk has recommended doubling the stcUSD supply cap on Aave V3 MegaETH from $20 million to $40 million after the reserve hit 100% utilization at nearly $20 million. The concentration risk is acute: two positions account for almost all supplied stcUSD, with health factors of 1.02 and 1.03, meaning they are within a marginal price move of liquidation. USDm is borrowed against this collateral in Stablecoins E-Mode at a 90% liquidation threshold.
For Armada's crypto repo desk, this governance action is a real-time benchmark for stablecoin collateral stress in DeFi. Positions this close to liquidation at a major Aave instance can cascade into forced selling and liquidity pressure on stcUSD and related stablecoins. If any Armada counterparties hold stcUSD as collateral or are active in adjacent DeFi stablecoin markets, this concentration risk warrants monitoring as a potential contagion trigger.